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Wednesday, 12 January 2011

Small is beautiful. Niche specialists trump generalists. Why?

I’m currently reading “Positioning For Professionals” by Tim Williams. He makes a compelling argument for the narrowing of focus as a strategy for success. This got me thinking about the polarity of niche specialists vs. generalists in the agency market.

“Full service” network agencies like their clients to believe they can cover all bases - that they have high-level skill sets across the full spectrum of strategy, account management, creative and production / execution. The truth is however that many elements of production / execution are outsourced begging the question: Why is this still in the agencies’ remit? A long linear production supply chain adds complexity and cost, but reduces transparency and visibility from a client’s perspective. As clients look to take greater control of execution, I believe we will see more direct client relationships with niche specialists across production, talent, music, photography and post-production. As ever, marketing procurement consultants will help clients to build and manage a network of niche specialists resulting in the following benefits for brand owners:

• Reduced agency fees (given that production / execution is removed from their remit)
• Direct relationships with specialist supply chain
• Removal of agency mark-up on production costs (yes, some agencies still charge this!)
• Lower supply chain costs through more effective use of competitive tendering
• Increased transparency and visibility